Markets or goals?

The UN ratified its Sustainable Development Goals (SDGs) a month ago. $US2.5 trillion of foreign aid spending between 2015 and 2030 will be devoted to achieving them. UN Secretary-General Ban-Ki Moon says they are a plan “for ending poverty in all its dimensions, irreversibly, everywhere, and leaving no one behind”. He is wrong. The SDGs are inefficient, driven by politics and misdiagnose poverty.

Unfortunately, it is poor people themselves who will suffer as a result of foreign aid programs that are less effective than they could be.

The SDGs are supposed to build on the work of the Millennium Development Goals (MDGs) which expired this year having run since 2000. But whereas the MDGs consisted of 8 goals with 18 targets, the SDGs consist of 17 goals with 169 targets.

The SDGs fall into the trap common amongst big multilateral foreign aid organisations of trying to fix everything, rather than working in the areas where they can have the biggest impact. In attempting to be everything for everyone, the SDGs have only succeeded in becoming a disparate wish-list for the development community.

As a result, the 169 targets are both too ambitious and too specific. For example, goal 1.1 seeks to “eradicate extreme poverty for all people everywhere” whilst goal 14.9 wants to “provide access of small-scale artisanal fishers to marine resources and markets”.

I reckon anything more than 10 targets and you have no chance of achieving them.

To overcome this problem, Danish economist Bjorn Lomborg constructed a rigorous cost-benefit analysis on each of the SDG targets. He whittled the list of 169 down to just the 19 most impactful targets.

That is not a hard-nosed ‘economic rationalist’ approach to foreign aid. It is about to trying to ensure development has the greatest impact for the people who need it. Foreign aid can’t fix everything but as development economist William Easterly says, it can help some people some of the time. The fact that the SDG process is political and ideological means the kind of foreign aid the goals offer isn’t as helpful to poor people as it could be.

So aid can help some people some of the time.

Poor people are poor because they have been prevented from participating in free markets. This is because free markets are the best drivers of economic growth, which in turn provides access to health, education and other things the SDGs are trying to achieve.

Yep. By poor we don’t mean $20,000 a year poor, but $500 a year poor.

No country has developed successfully without some measure of free markets. The evidence of this is absolutely manifest in the last few decades.

In China, free market reforms such as allowing international trade, removing barriers to private enterprise and reducing state control of agriculture have lifted 680 million people out of poverty since 1980. Furthermore, World Bank economist Martin Ravallion believes economic growth in other developing countries has lifted 280 million people out of poverty since 2000.

The embrace of markets by China and India did far more to lift people out of poverty than the UN goals.

A recent study found that the economic liberalisation in India has partially eroded the caste system. Increased female entrepreneurship precipitated by microfinance has been shown to reduce domestic violence and gender discrimination. Swedish economists recently found that countries with greater economic freedom were more likely to have greater tolerance of gay people.

Liberal markets can lead to liberal countries.

The Lomberg study is interesting also. They found:

Freer trade from completing the World Trade Organization’s Doha agreement would return more than $2,000 of extra value for each dollar spent to retrain and compensate displaced workers. It would lift 160 million people out of extreme poverty, giving every person in the developing world an extra $1,000 in income every year by 2030. By comparison, money transfers—paying the poorest people enough to lift them out of poverty—would have huge administrative challenges and institutional deficiencies, with benefits of only $5 for every dollar spent.

Free trade is hugely more effective than aid.

Boosting the availability of preschool is an exceptional development target. Tripling access in sub-Saharan Africa would have benefits worth more than $30 for every dollar spent, because of improved future earnings and other social benefits, such as instilling an interest in learning in children when they are very young.

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Comments (12)

Poor people are poor because they have been prevented from participating in free markets.

I wonder how those working as slaves in rare earth mining operations in The Congo are ‘prevented’ from participating in the ‘free market’ when their slavery and abject poverty is a direct result of their exposure to an economic paradigm the corporate world euphemistically describes as ‘the free market’.

To overcome this problem, Danish economist Bjorn Lomborg constructed a rigorous cost-benefit analysis on each of the SDG targets. He whittled the list of 169 down to just the 19 most impactful targets.

DPF
I would suggest that a very careful look at any of Bjorn Lomborgs conclusions may find errors.

Looking into his prior use of statistics might find he is not always honest with the truth.

Bjørn Lomborg is a well-known personality in the environmental debate. He is the author of several books which, due to their copious lists of notes and references, appear very technical and scientific and therefore trustworthy. Unfortunately, those reading his books or listening to his lectures or seeing his film are rarely aware that the facts and statements presente d by Lomborg are often not reliable.
When experts in the fields covered by Lomborg check his texts, they most often find that the evidence has been distorted. Danish biologist Kåre Fog has systematically over many years checked Lomborg´s texts against his sources and references and against other scientific literature. His conclusion is that Lomborg´s texts are systematically manipulated to fit a certain agenda.
The web site Lomborg-errors has been established to document this claim. It gathers and publishes errors found in Bjørn Lomborg´s books, especially “The Skeptical Environmentalist” (2001) and Cool it! (2007).
In addition, it gives information on cases and activities related to Bjørn Lomborg, attempts to describe his methods, and points out cases where the claims about Lomborg´s dishonesty seem to hold true.

marquess

Yoza: Because that’s all there is. Without the infrastructure and access to first world markets that the rest of us enjoy, it makes it very hard to eke out a living other than subsidence agriculture or being a literal wage slave.

If they had the opportunity to pursue other opportunities their lives would improve. China did it, and while it’s not a great living compared to NZ I know I’d rather work in a factory than struggle to tend to a corn field to feed my family.

emmess

cmm

Yoza: In places like India, people are downtrodden by the local warlords/whatever. They are denied free trade. They are not allowed to sell their labour on the open market. They are forced to work for these people, then are forced to buy their food etc at inflated prices from the company store. It is in essence slavery.

I really struggle to see how you can say that is a result of free trade.

With free trade, those people would be able to sell their labours and goods to whomever they wanted. Sure, there would be middlemen, but the middlemen would have to compete and thus provide more fair prices.

Wiould free trade work for them? Maybe. It has worked for us westerners. Since serfdom was broken down people have been able to stand on their own two feet and make a go of it.

Ed Snack

So the drug addled nutter Griff joins the anti-Lomborg crusade. Sadly for Griff, the people he idolizes are even less honest, and not just with statistics. That site, Lomborg Errors, is riddled with errors, has outright fabrications so numerous it is hard to separate fact from malice, and is driven by extreme green fanatics who are even stupider and more unpleasant than the drooling Griff.

The trouble with Lomborg for people like Griff is that despite being a full on warmenista himself (Lomborg accepts gorbal warming, just disagrees on cost-effective ways to do something about it), he threatens the world wide multi billion dollar gravy train that all the climate change warriors are so lucratively riding on; like Shukla and his mates.

waikatosinger

DJP6-25

Thugocrats, kleptocrats, dictators, presidents for life, and absolute kings are even now ordering new limos, buying new fur coats and diamonds for their mistresses, and sending memos to their drug dealers in anticipation of the $ coming their way. They all love the UN.

Why not when he has been caught being such a naughty boy with numbers and references?
The use of different discount rates for climate change and other threats has only one explanation.
That is why abbots attempts to give him legitimacy by buying a place at a university for him failed.

tom hunter

Since people don’t like economist Bjorn Lomborg perhaps they’d prefer Angus Deaton – who has just won the Nobel prize in economics.

It’s very appropriate really because Deaton is the author of The Great Escape, which is all about people escaping poverty via capitalism.

When you read that world poverty has fallen below 10% for the first time ever and you want to know how we know — the answer is Deaton’s work on household surveys, data collection and welfare measurement.
….
Deaton’s work on world poverty is a tour de force: he made advances in theory, he joined with others to take the theory to the field to make measurements, and he used the measurements to draw attention to important issues in the world.

That graph is a fairly staggering example of what has been achieved – from 27% of the global population in 1970 to 5% in 2006, even as the population has gone from 3 billion to 7 billion +. Even more so when you consider that it’s happened in developing countries that have not first built social welfare systems (e.g. China) or even very effective governments in some cases (Africa). The question is what the governments are effective at doing:

Unfortunately, the world’s rich countries currently are making things worse. Foreign aid — transfers from rich countries to poor countries — has much to its credit, particularly in terms of health care, with many people alive today who would otherwise be dead.

But foreign aid also undermines the development of local state capacity.

This is most obvious in countries — mostly in Africa — where the government receives aid directly and aid flows are large relative to fiscal expenditure (often more than half the total). Such governments need no contract with their citizens, no parliament, and no tax-collection system.

If they are accountable to anyone, it is to the donors; but even this fails in practice, because the donors, under pressure from their own citizens (who rightly want to help the poor), need to disburse money just as much as poor-country governments need to receive it, if not more so.

According to Deaton what the rich world really needs to do is:

… to agitate for our own governments to stop doing those things that make it harder for poor countries to stop being poor. Reducing aid is one, but so is limiting the arms trade, improving rich-country trade and subsidy policies, providing technical advice that is not tied to aid, and developing better drugs for diseases that do not affect rich people.

We cannot help the poor by making their already-weak governments even weaker.

The UN and all its goals should either focus on improving these factors – or getting the hell out of the way.